Aktie-Ansvar Europa is an actively managed fund with a focus on quality European companies, regardless of industry and size. Responsible ownership is a central part of the investment process. The description captures exactly what makes the fund extra interesting right now – European shares with a focus on quality companies and active responsible management.
Why is Europe interesting?
– With rising interest rates and an incipient recession, the company’s valuation becomes more important. Here, European shares stand out as attractive compared to other markets, says Lars-Erik Lundgren. The European companies are traded at low levels both relative to their own history and other markets. But there are also more factors that speak for these companies. – The pandemic has accelerated several trends that benefit some fine European companies with activities linked to electrification, green energy, automation and diversification of important supply chains. In addition, enormous fiscal stimulus in the coming years, together with a large need for investment in everything from infrastructure to energy supply, has created an interesting framework for European companies, Lars-Erik continues.
What characterizes the companies you are looking for?
Eric Karlsson describes the management as risk-focused and the greatest importance is placed on the companies’ qualities and not so much on future forecasts. – In an environment with high inflation, rising interest rates, high electricity prices and pressured consumers, we want to own companies that are less dependent on the economy and preferably have a structural growth trend behind them when growth slows down. Investments in this type of company, especially after general deposits, provide good conditions for a good risk-adjusted return in the long term, explains Eric. Management is focused on quality companies that are characterized by a high return on invested capital that generates value-creating growth. This type of company has proven to perform better over time and especially in the part of the business cycle we are in now. – We want to see that the companies have a high gross margin as these companies tend to find it easier to pass on cost increases to their customers. High gross margin is an indication that the company has an important product for the customer and lower competition. Another characteristic of high quality is lower indebtedness and financing costs, which means that they are not hit as hard by rising interest rates, says Eric.
What speaks for an actively managed fund instead of an index fund?
– In current market conditions, our fund is defensively positioned with a combination of value companies, defensive sectors and quality companies, which are important factors that an index fund does not take into account. The market consistently underestimates the quality companies, which creates opportunities for us and we have taken the opportunity to add the quality companies we want to own in the long term now that the quality premium has come down. In addition, profit increases are expected in 2023 despite the challenges in the market, says Lars-Erik. Lars-Erik explains that the holdings in the portfolio are equally weighted, which also fulfills an important function in active management. The weight in companies whose valuations have risen sharply is reduced, which creates room for investments in companies with low valuations, something that increases the chance of a good risk-adjusted return in the long term. – When we had zero interest rates, asset prices were governed more by central bank decisions and other macro factors, whereas today it is everything more important to look at individual companies’ conditions to cope with the challenges we see, Lars-Erik continues.
Do you have any scouting for 2023?
We believe that it is a favorable position to increase its European exposure. After many weak years in Europe, the framework is different now and there are conditions for good profit growth for some companies. Especially for quality companies that have historically delivered in this part of the business cycle. With higher interest rates and thus increased capital costs for the companies, the difference between good and bad companies will be revealed. This spread speaks for active management compared to index management which indiscriminately buys all companies in a market. We look forward with confidence to the rest of 2023, conclude Lars-Erik Lundgren and Eric Karlsson. Historical returns are no guarantee of future returns. The money invested in funds can both increase and decrease in value, and it is not certain that you will get back the entire invested capital. The value of funds can vary greatly due to the composition of the funds and the management methods used by the fund company. Information brochures and fact sheets can be ordered from Aktie-Ansvar or downloaded from www.aktieansvar.se.Patrick Bejerskog
[email protected] The following attachments are available for download:
Press release Good location for European quality company See full press release and other news from this company at Cision News.
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